Daily Blast - September 14, 2020 - Lewis Brisbois Bisgaard & Smith LLP

The Fourth Appellate District, Division Three issued its opinion in Murray v. UPS Capital Ins. Agency, Inc. (2020 Cal. App. LEXIS 866) on Friday, September 11, 2020, reversing summary judgment granted in favor of an insurance broker specializing in inland marine insurance. The appellate court found a triable issue of fact exists as to whether the insurance broker should be held to an special duty to explain to his client what the insurance purchased covered and did not cover. Plaintiff had purchased computer equipment which was damaged by the United States Postal Services while being transported from California to Texas. Plaintiff purchased insurance from defendant UPS Capital Insurance Agency for the shipment, which he believed covered any loss or damage by UPS. However, his insurance claim was denied on the basis that the coverage he purchased did not apply to shipping damages, and only applied to catastrophic losses such as the entire destruction of the vehicle in which the shipment was carried.

The court declined plaintiff’s request to create a new rule that brokers/agents specializing in a field of insurance hold themselves out as experts and subject themselves to a heightened duty of care as to that particular kind of insurance. However, the court found that plaintiff raised triable issues of fact as to whether UPS Capital undertook a special duty by holding itself out as having expertise in inland marine insurance and plaintiff reasonably relied on its expertise. UPS Capital argued plaintiff purchased a policy with “FPA” coverage, not an “All-Risk” policy, and that plaintiff never inquired about the meaning of language in the policy, nor did he ask what risks were covered or not covered. UPS further argued that their agent did not make any coverage representations about the insurance sold. In opposition, plaintiff submitted evidence supporting that defendant held itself out as specializing in inland marine insurance policies covering one-time UPS shipments, that UPS Capital selected the policy for plaintiff and advised plaintiff to opt out of additional insurance on UPS shipping forms, and that the insurance application ambiguously referenced “All-Risk/other” coverage and did not define FPA coverage in any meaningful sense. The court acknowledged the general rule that “an insurance agent has no duty to affirmatively advise an individual seeking insurance about different or additional coverage.” However, in finding a triable issue of fact, the court noted exceptions to this rule, and concluded that “[w]hile general insurance brokers should continue to benefit from the public policy of protecting them from becoming “‘a blanket insurer for his principal’” (Jones, supra, 189 Cal.App.3d at p. 956), the same cannot be said for this emerging group of highly specialized insurance brokers/agents. In light of all the above, we conclude evidence of specialization at a minimum creates a presumption the agent/broker anticipates their clients will rely on their acknowledged expertise and supports courts imposing an extended duty.” Opinion, pg. 26.

Attached is a copy of the opinion for your reference.